Copper hit a one-week low on Tuesday as talks to resolve a strike at the world's biggest copper mine in Chile were set to resume and production at another huge mine in Indonesia restarted. Benchmark copper on the London Metal Exchange ended down 1.8 percent at $5,776 a tonne, more than erasing the previous session's 0.9 percent gain. The metal had earlier touched $5,761, its lowest since March 14.
"Once (the strikes) are over, there could be quite a sharp fall in prices given demand seems quite subdued," said Caroline Bain, senior commodities economist at Capital Economics. "China is growing reasonably strongly, but this is as good as it gets and we will be slowing over the course of the year." The union representing striking workers at BHP Billiton's Escondida mine in Chile said it was open to further conversations that could lead to a reopening of negotiations.
Freeport-McMoRan's Indonesian operation has resumed copper concentrate production at its Grasberg mine, ending a stoppage of more than a month. Cash copper was trading at a discount of $27 a tonne to the three-month price, its weakest since mid-January and indicating ample supply. Peruvian zinc and silver miner Volcan declared force majeure on its mineral deliveries after heavy flooding disrupted transportation from the country's central region to the Pacific coast.
Peru's copper production rose 24.8 percent in January from the same month a year earlier while zinc output increased 11.3 percent Zinc ended down 1.2 percent at $2,829 as the market consolidated this year's strong gains, while sister metal lead closed flat at $2,273. Trade houses plan to place orders for large amounts of lead to leave LME warehouses in the next few days as they scramble for supply, a source said. Cash lead is trading at a discount of $6 a tonne versus the three-month price compared with a discount of $18 a tonne last week.
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